Chapter 6 ACCT 3337 Fall 2011 first part

Chapter 6 ACCT 3337 Fall 2011 first part - Chapter 6...

Info iconThis preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 6 Process Costing
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Difference Between Job-Order and Process  Costing Systems Job-Order Costing Each unique product or batch is considered a job Manufacturing costs are traced to specific jobs Process Costing Used when homogenous items are produced Total costs are divided by total units produced
Background image of page 2
Job-Order and Process Costing Examples Companies who use job order: Cray Computer Corporation, Boeing Company, Chris Craft  Boat Company, construction, Legal Services, or Repair  Services tailored to client. Companies who use process costing: Pepsico Incorporated, Starbucks Corporation, Revlon  Consumer Products Corporation, Goodyear Tire and Rubber  Company
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Product and Cost Flows in Process Costing Firms Product Flows Through Processes A product typically passes through multiple departments
Background image of page 4
Job-Order vs. Process Costing Job Order Costing Process Costing Ac c um ula te  c o s t to   uniq ue  jo b s Ac c um ula te  c o s t b y  pro c e s s A jo b  c o s t s he e t fo r e a c h  jo b  (s ub s idia ry le dg e r in  WIP) A WIP a c c o unt fo r e a c h  pro c e s s The re  a re  us ua lly le s s  pro c e s s e s  tha n jo b s , a nd the re  is   no  ne e d to  tra c e  m a te ria l to  m a ny jo b s  b ut jus t to  fe w  pro c e s s e s . Wo rke rs  us ua lly wo rk jus t o n o ne  pro c e s s  s o  no  ne e d fo r  tim e  tic ke ts  a s  we ll. Ma ny c o m pa nie s  tre a t la b o r a nd o ve rhe a d to g e the r a s   c o nve rs io n c o s ts . 
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 6
C o s ts  flo w in a  pro c e s s  s ys te m The units flow from process to process, when each process has  its own WIP inventory.  Each process adds materials and conversion costs, and then  transfers-out the units. What are the journal entries for the above flow?
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Costs and unit flow in a process system Each process needs to account for both the units that  go in and out and the costs that come in and out. Therefore we make for each process: A reconciliation of units A reconciliation of costs 
Background image of page 8
Reconciliation of Units Example: Process 1 (cleaning) in a milk factory (in gallons) Units to account for Units accounted for
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Reconciliation of units: Example Example 1: WIP inventory on 10/1 8,000 tons Units started in October ? Units completed in October 18,000 tons WIP inventory 10/31 1,000 tons
Background image of page 10
Reconciliation of Costs Example: Process 1 (cleaning) in a milk factory (in gallons) Costs to account for Costs accounted for
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Reconciliation of costs: Example Example for a specific process: WIP inventory cost on 11/1 $7,200 Material used during November $243,480 Conversion costs during November $91,120 Cost of units completed in November $336,000 WIP inventory cost 11/30 ?
Background image of page 12
Image of page 13
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/09/2011 for the course ACCT 3337 taught by Professor Staff during the Fall '08 term at University of Houston.

Page1 / 33

Chapter 6 ACCT 3337 Fall 2011 first part - Chapter 6...

This preview shows document pages 1 - 13. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online